DAN ATKINSON: Will we pay a higher price than the £375bn in QE for Bank of England's drive to devalue sterling?

Sir Mervyn King is due in Washington in April for his last official appearance at a meeting of the Group of 20 leading economies and the International Monetary Fund.

But the chances of the Bank of England Governor being whisked out for a farewell dinner by his fellow central bankers may have diminished somewhat after the events of last week.

Bad enough that the Bank had already chalked up the decline in sterling as a positive factor in helping rebalance the economy towards exports, but on Wednesday it emerged that the Governor and two others on the nine-member Monetary Policy Committee had voted on February 7 for a £25billion expansion of the £375billion quantitative easing money-creation programme.

Slide: The pound's current drop will push up the price of all imported goods

All things being equal, more QE
weakens the currency. Sterling is already down five per cent against a
basket of world currencies since New Year’s Eve and had King’s view
prevailed another tumble would have been on the cards.

At
a time when accusations of competitive devaluation are flying to and
fro across the economic scene, the Governor’s attempt to crank up QE to
25 per cent of gross national product must have looked like an act of
currency war.

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Pretty
much everyone is spooked by the notion that their competitors will
snaffle what growth there is by driving down their exchange rates,
making exports cheaper. Japan, the US and Britain are suspected of using
QE to stage backdoor devaluations, while France’s President Francois
Hollande has suggested the European Central Bank follow suit.

Assuming Britain has, by accident or design, a cheap-pound policy, should we worry?

Few
seem to. Anyone in their mid-thirties or older will recall the
blood-curdling warnings of the early Nineties as to the disaster that
would follow sterling’s exit from the European Exchange Rate Mechanism.

When
we were forced to devalue, the cataclysm not only failed to
materialise, but the economy embarked on 15 years of uninterrupted
growth.

In light of that, who’s afraid of a big, bad sterling crisis? Almost nobody.

Alas,
history rarely repeats itself. Sterling’s current slide – which will
push up the price of all imported goods – is taking place at a time when
inflation is running 0.7 of a percentage point above its two per cent
target, and has not been on target for more than three years.

And
today’s high-end British manufactured goods tend to sell on quality
rather than price, thus a low exchange rate may not produce much
benefit, while back home all of us will face the prospect of higher
prices.

Hardly a win-win proposition.

Of course, King could always treat himself to dinner in Washington. Assuming, that is, that the pounds in his pocket will still cover the bill.